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After this the pound has fallen to its lowest level in six months Rachel Reeves gave him Strongest signal yet that taxes will rise But Budget In a major speech on Tuesday morning.
The pound, which was already lower before the speech, fell further after the comments and was 0.3 percent lower at US$1.31 and 0.3 percent weaker at 1.14 the euro, not far from last week’s two-year low against the single currency.
Real The UK economy has been under pressure in recent days due to concerns over the Bank of England’s interest rate decision on Thursday, and the likelihood of another cut is increasing.
Experts are divided on whether the cut will happen in November or December, but a further cut from the current 4 per cent seems increasingly likely as inflation is now believed to have reached 3.8 per cent, while the outlook for the jobs market looks more volatile.
Meanwhile Britain’s long-term borrowing costs fell after the Chancellor reiterated his “strong” commitment to his fiscal rules.
yield on uk government bondalso known as GiltsThe yield fell six basis points to 4.38 per cent, while the 30-year yield fell to 5.15 per cent, its lowest level at a time since April.
The fall in gilt yields means Britain’s long-term borrowing costs will fall, with Ms Reeves again stressing that one of her key aims is to reduce the national debt.
Ms Reeves’ comments and pledge on inflation have raised expectations that cuts are on the way.
With both businesses and individuals alike facing tax rises, industry leaders were quick to react, saying confidence remains low following the previous increase and changes to National Insurance earlier this year.
“Business shares the government’s ambition to grow the economy, reduce inflation and boost productivity. However, none of this is possible if costs to companies continue to rise,” said Jonny Haseldine, head of trade policy at the British Chambers of Commerce.
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“So our message is clear – no more taxes on business. “While the Chancellor has talked about alternatives this morning, lining the pockets of companies once again would be the wrong choice.
“Our latest research shows that business confidence and investment levels continue to decline. A fifth of companies are expecting lower turnover for the next year, and a quarter have reduced investment plans.
“Companies across the UK are already feeling the pinch and many are struggling to keep their heads. 26 November is a make or break moment for British business – the Budget must deliver.”